House passes education budget bill with just $118M in funds

Alaska House of Representative leaders on Feb. 13 claimed credit for getting an education funding bill passed and over to the Senate within three weeks of the session starting, but the funding source and the size of the budget are now up to the Senate.

After removing $1.2 billion in funding from House Bill 287 that was to come from the Constitutional Budget Reserve, the bill as transmitted to the Senate includes only about $118 million for Alaska’s 54 school districts.

It made it out of the House Feb. 7 by a 33-3 vote in an attempt to separate education funding from the traditional operating budget. But a vote to draw the vast majority of the proposed $1.3 billion from the CBR failed to reach the 30-vote threshold.

“We had only three negative votes. Unfortunately, the minority didn’t agree with the funding of the bill,” said Rep. Paul Seaton, R-Homer, the bill’s main sponsor, on Feb. 13. “But all the options are on the table for the Senate. I am confident that if the Senate agrees the CBR is the best mechanism, they will do that.”

It wasn’t clear why Seaton believed the Senate would consider it when the CBR funding mechanism didn’t meet approval in the House, failing in a vote of 20-16. Drawing from the CBR requires a supermajority, three-quarters vote from both the House and the Senate.

So far, the Senate hasn’t yet stated its agenda for the education budget, Senate President Pete Kelly, R-Fairbanks, and Majority Leader Peter Micciche, R-Soldotna, said in a Feb. 12 media briefing.

Kelly said the, “House simply didn’t pass an education funding bill and the House’s effort amounts to wasted time for the past three weeks when we were counting on them to get it out early. This isn’t fixed just because we have it (the bill) in our hands.”

Kelly expressed frustration that the “reality” of an unfunded appropriations bill didn’t sink in among members of the House for a few days, nor did the press release that was sent out from the House Majority catch it, he said.

“The bottom line is that the House sent over an appropriation bill that simply covered $118 Million for Mount Edgecumbe (High School) funding and $66 million in the language section for pupil transportation,” Micciche told the Journal in an email. “It was only short $1.2 billion for actual education funding. The Senate Majority supports funding education in a way that avoids the ‘pink slip impacts’ of last year. We will be working to solve this issue in a timely manner.”

Absent the CBR approval from the House, the bill was reduced to federal grant funding and $67 million for pupil transportation drawn by simple majority from the Statutory Budget Reserve.

Still, a House Majority press release claimed the bill appropriated $1.3 billion even though the original language using $1.2 billion from the CBR had to be stripped out of the final version sent to the Senate.

Kodiak Republican Sen. Gary Stevens has a similar bill to take education funding out of the budget debate. Stevens’ Senate Bill 131 is currently in the Senate Finance Committee.

Stevens pre-filed his bill to avoid the tardy budget politics three years in a row that caused budget-balancing nightmares for Alaska’s school districts when the Legislature failed to pass a timely budget. He was the first to propose in a bill for education funding – one-third of the state’s estimated $4.5 million budget – to be removed from the 2019 Fiscal Year Operating Budget.

The Path of HB 287

Seaton sought to change that too, with a bill he proposed that would send $1.3 billion in K-12 funding out the door earlier. He proposed to do it through the state’s savings accounts, with $1.2 billion coming from the CBR, and $68 million from the Statutory Budget Reserve Fund, or SBR.

The CBR and SBR funds have much lower interest earning rates when compared to other funds, Seaton wrote in his sponsor statement, which was the reason for proposing the savings draw.

“When considering the proposed use of the CBR, the fund balance would still be over $1 billion after the appropriation made in this bill,” Seaton stated.

The state’s money managers insist there should be at least $1 billion in savings at all times as a buffer for emergencies or short-term unexpected revenue shortfalls.

Seaton contended further that if the Education budget continues to be tied to the operating budget, it is subject to the line item veto or veto restrictions that can be made by the governor under competing state priorities.

But “an early, separate appropriation for education that has existing funding identified would prevent these problems and will allow school districts to finalize their budgets on time,” Seaton wrote.

Early funding education has bipartisan support because there is a general consensus among legislative leaders of both parties to keep K-12 spending consistent with current levels in the 2019 fiscal year budget. That also aligns with Gov. Bill Walker’s proposed 2019 operating budget.

The first amendment to HB 287 came from Rep. Jennifer Johnston, R-Anchorage, who didn’t want the funding vehicle to be the CBR or the SBR. Instead, she proposed revenue for schools should come from the state’s unrestricted general fund, the same way it’s always funded.

Johnston called it “backward funding” when money is taken from a savings account to pay bills, instead of from the flow of incoming revenue. Save the CBR for augmenting cash shortages in the general fund, she advocated. Besides, there is a loss in revenue from interest money when the CBR and SBR are tapped, she said.

Agreeing to fund the Education budget from the CBR could also lessen the leverage minority Republicans have in other budget debates yet to come, as savings will be needed at some level to fill the budget deficit this session. Only a standard majority vote is required to draw from the General Fund and the near-depleted SBR.

House Majority Leader Rep. Chris Tuck, D-Anchorage, said the Education Department budget needed to be separated from the fiscal year’s operating budget. After discussions on the controversial nature of cracking into the CBR to do it, he warned the 90-day session goal wouldn’t be met if they pursued that path.

“We need a separate appropriation and we need to make it out of here in 90 days,” Tuck said. When legislators go overtime into special sessions, “districts are left writing their budgets over and over again,” he said. “If you want to be here longer than 90 days: vote against the amendment.”

Johnston’s amendment was voted down 16-21.

Rep. Lora Reinbold, R-Eagle River, proposed requiring school districts to budget for and “spend a minimum of 70 percent of the school district’s budget for the fiscal year ending June, 30, 2019.”

After much debate on where there may or may not be waste in school district budgets, the House voted 18-19 to not pass it.

A third amendment, also by Reinbold, sought to direct that school districts “subject to budget reductions issue teacher layoffs or non-retention notices … only after considering all other cost-saving measures, including laying off employees in other bargaining units.”

In her floor speeches, Reinbold did not mention the statutory requirements to notify teachers in two tiers prior to the end of the school year of any layoffs. Otherwise, if no notice is made, the district cannot lay the teachers off.

Rep. Geran Tarr, D-Anchorage, strongly protested this amendment after asserting that laid-off janitors meant some teachers are now cleaning their own school rooms three days a week instead of doing instruction preparation. Rep. Adam Wool, D-Fairbanks, joined that argument to give an illustration about social workers provide safety nets for “kids showing up without socks” and were already some of the first to go in budget cuts.

Juneau Democrat Rep. Justin Parish talked about the Juneau School District’s $3 million cut, which came on top of $11 million trimmed from its budget over the course of the last five years.

“More cuts will not be well-received and are not appropriate,” he said.

In the end, the third amendment was shot down as well.

Rep. Tammie Wilson, R-North Pole, proposed a fourth amendment along the same lines as Reinbold’s to instruct districts to put cuts of other staff ahead of teachers. But that too was defeated in a late-evening vote 20-16.